Buyout Of Zogenix Likely Based On Garner's Track Record [View instapost]

Update:2/12/15,

As expected and commented on above in my 1/30/15 comment...Zogenix CFO Ann Rhoads confirmed yesterday at Leerink Global Healthcare Conference that since the recent sNDA approval of Zohydro ER with AD tech, Zogenix has received:

"Additional interest from companies that have morphed into more strategic dialogue around Zohydro ER."

Strategic dialogue = buyout discussions of Zohydro ER asset

ZGNX sold Sumavel for 4X sales run rate in 2014 for $105M but I think the market opportunity for Zohydro ER is much larger and the asset is much more valuable. At a current $23M sales run rate, Zohydro ER could fetch 5-7X sales for an asset value of $115M - $165M.

If Cam & company's ongoing "strategic dialogue" can get the bidding up to 7X range ($165M), I would expect them to sell Zohydro ER and use $ to focus on valuable pipeline.

Buyout Of Zogenix Likely Based On Garner's Track Record [View instapost]

Yes, Cam & Co. were successful in getting FDA approval for Zohydro and the stock want to $5+ on this success. What caused the major drop is the extraordinary attempt by MA Governor Patrick to ban the drug in his state. I explain this in details here, http://bit.ly/1yeeI5d .

Cam & Co. were successful again in MA court by beating back the Governor's assault on Zogenix and their FDA-approved drug, Zohydro. I explain the victory here, http://bit.ly/1yeeJWD .

This assault on a private company by Governor Patrick did some damage to Zohydro's launch and early adoption. Cam & Co. are finally gaining some steam in Zohydro sales and today's AD formulation approval (95% chance IMO) will dramatically expand sales and blunt the criticism of Zohydro for good.

If the entire company does not get bought out after approval, at the least I would expect there to be a bidding war for Zohydro ER franchise from Purdue and Teva. Zogenix has already inked small deals re: Zohydro with Teva and Purdue. This is a clue that the lines of communication are open and the companies are in discussions.

Cam & Co. like to exit their investments when the price is right. His successful track record is legendary. I expect nothing less from ZGNX when the price of the Zohydro franchise dramatically increases with the expected approval today.

Video released today (1/13/15) of NVIV's pilot study first patient walking in the water....and moving legs beneath knee while seated. This video evidence of efficacy of the first in human implanted Neural Spinal Scaffold (NSS) to treat spinal cord injury should be very encouraging for NVIV investors, not to mention the fans of Jordan's recovery.

This video is more powerful and more illustrative of the success to date of the first in human procedure than any PR would have been to outline Jordan's progress to date.

I agree with you 100% on NVIV as having the potential to be a major mover in 2015. You mention the NVIV share price in 2013 of $6.20/share. Based on OS at that time, the market cap rose to $487 million. This rise was on the FDA news of approval of human trials and the hope of safety/efficacy once device was in human trials.

Today, patient #1 according to "the interview" you have authenticated has progressed positively from ASIA A to ASIA B in the impairment scale. Yet, the share price is now at $1.30, or a market cap of $121 million.

There is a major disconnect and massive undervaluation based on what is actually happening in this human trial.

With the company being divorced to date in contact directly with Jordan or in the assessment of current data on him, we are approaching the critical 90-day assessment next Monday (January 12) where NVIV will get a full assessment report on Jordan's progress since October 14.

I am under the assumption that this 90-day progress will rise to the level of "dramatically positive results" which the NVIV CEO said on October 15 would result in NVIV communicating the progress outside of standard medical and scientific forums.

This leads to a major catalyst next week post the 90-day assessment report provided to the company. I think the company has to follow their 10/15/14 guidance and inform shareholders and public of what you have authenticated as "dramatically positive results."

The application, EMA/OD/117/14- For treatment of acute peripheral arterial occlusion - was not one of the 29 applications on the list which received a positive orphan status opinion.

According to EMA, application EMA/OD/117/14 has been withdrawn.

Therefore, the basis for the near term catalyst mentioned in this article is not happening. This was unexpected considering the MST-188 for treatment of ALI has already received orphan status in the US.

When the full meeting minutes are published in about 60 days, we should know more details on what led to this application withdrawal decision.

MSTX announced that EU orphan application (MST-188/ALI) was filed in Q2 - 2014. Now that application has been withdrawn. Now the company needs to provide an update on the timing of this application going forward. When will they reapply?

Looking ahead, the following is still on the horizon for MSTX despite this EU orphan development which include:

Patience on this one...as many catalysts are on the horizon. This current valuation of $75M very much undervalues the company's drug asset potential.

The EMA's Committee on Orphan Medicinal Products (COMP) is meeting as I type to give an opinion on MST-188 (ALI). With orphan status designation expected, this would give MSTX orphan status for MST-188 in US and in EU for two different indications (sickle cell & acute limb ischemia).

The COMP meeting ends on Thursday, October 9, and they will issue a meeting report a few days after with their opinions on orphan status. The average time for this monthly report to be released in 2014 is 6 days after COMP meeting ends (October 15 in this case), but they have also issued report as soon as 2 days after meeting ends. Therefore, we could know as early as Monday, October 13.

To inform your opinion of why "GSK dumped this", here is the full history of what is now known as MST-188. You'll notice that the new formulation is a second generation "purified" version....NOT the "unpurified" version used by GSK sub:

MST-188 (formerly known as ANX-188, FLOCOR and CRL-5861) – A second-generation product with purified poloxamer 188 as the active ingredient. Certain low molecular weight substances present in excipient-grade poloxamer 188 that are associated with elevated serum creatinine are not present in MST-188. No clinically significant elevations in creatinine have been observed in clinical studies conducted with the purified material (>300 administrations).

Early Development: The CytRx Corporation/Burroughs Wellcome Alliance

Poloxamer 188 is a well studied compound. It was originally used as an emulsifying agent in topical wound cleansers and parenteral nutrition products. However, the therapeutic use of poloxamer 188 was largely conceived by Dr. Robert Hunter, MD, PhD (Distinguished Professor and Chairman, Department of Pathology and Laboratory Medicine, University of Texas Medical School at Houston). Dr. Hunter (then at Emory University) identified the compound’s rheologic, cytoprotective and antithrombotic activities through an extensive series of laboratory studies. His work led to the formation of CytRx Corporation, a start-up company that licensed Dr. Hunter’s inventions from Emory. CytRx conducted a wide range of pre-clinical and clinical studies with first-generation poloxamer 188, then known as RheothRx. These studies led to a major alliance with Burroughs Wellcome (today, GSK). Burroughs also performed an extensive series of nonclinical studies and 8 clinical trials, primarily focused on acute myocardial infarction (AMI). Early studies investigating RheothRx were promising. The largest AMI trial planned to enroll approximately 20,000 patients. However, during the 3,000-patient lead-in phase of this study, elevations in serum creatinine were observed, particularly in those patients aged 65 years and older and in subjects with elevated creatinine at baseline. This phenomenon was referred to as “acute renal dysfunction” and resulted in the discontinuation of the program by Glaxo, which had recently merged with Burroughs Wellcome.

Addressing Renal Toxicity and Pursuing Sickle Cell Disease

After Glaxo returned the RheothRx program, CytRx investigated the source of the renal dysfunction and determined the elevation in serum creatinine was attributable to preferential absorption of certain low molecular weight substances by the proximal tubule epithelial cells in the kidney. CytRx developed a proprietary method of manufacture based on supercritical fluid chromatography that reduced the level of these low molecular weight substances present in poloxamer 188, creating what is now known as purified poloxamer 188. Nonclinical testing of purified poloxamer 188 (now known as MST-188), demonstrated less accumulation in kidney tissue, less pronounced vacuolization of proximal tubular epithelium, more rapid recovery from vacuolar lesions, and less effect on serum creatinine. A full report of the differential effects of commercial-grade and purified poloxamer 188 on renal function has been published.1

Subsequently, CytRx sought to re-introduce MST-188 into the clinic. However, CytRx lacked the resources to conduct a 20,000-patient heart attack study. Instead, they focused the development of MST-188 in sickle cell disease (SCD), a rare disease with a huge unmet need and in which RheothRx had demonstrated positive results in a pilot Phase 2 study conducted by Burroughs Wellcome. In that Phase 2 study (n=50), RheothRx significantly reduced the duration of crisis, pain intensity, and total analgesic use and showed trends to shorter days of hospitalization in the subgroup of patients who received the full dose of study drug (n=31). These data were reported more fully by Adams-Graves et al.2 Notably, CytRx conducted safety studies in both adult and pediatric sickle cell patients and, even at significantly higher levels of exposure than anticipated therapeutic doses, there were no clinically significant changes in serum creatinine observed and no acute kidney failure reported. Based on these promising Phase 1 and 2 results, CytRx subsequently launched a randomized, double-blind, placebo-controlled Phase 3 study of MST-188 in 350 patients with sickle cell disease. The primary endpoint was a reduction in the duration of a painful crisis. However, CytRx concluded the study at 255 patients, in part due to capital constraints. Nonetheless, the study demonstrated treatment benefits in favor of MST-188. However, it did not achieve statistical significance in the primary study endpoint (p=0.07). Mast believes that enrolling fewer than the originally-planned number of patients and key features of the study’s design negatively affected the outcome of the primary endpoint. In particular, the study assumed that most patients would resolve their crisis within one week (168 hours). However, a substantial number of patients did not achieve crisis resolution within 168 hours and were assigned a “default” value of 168 hours, which had a potentially significant effect on the primary endpoint. Notably, in a post hoc “responder’s analysis” of the intent-to-treat population (n=249), which analyzed the proportion of patients who achieved crisis resolution at 168 hours (excluding those who had been assigned the default of 168 hours), over 50% of subjects receiving MST-188 achieved crisis resolution within 168 hours, compared to 37% in the control group (p=0.02). Data from the Phase 3 study are reported more fully by Orringer et al.3 Following conclusion of the Phase 3 study, CytRx merged with a private company and modified its business strategy by discontinuing development of all of its existing programs (including MST-188) to focus on assets held by the private company with which it merged.

SynthRx

After the corporate reorganization at CytRx, a group of individuals, including Dr. Hunter, formed a private entity, which they named SynthRx, Inc., to acquire rights to the data, know-how, and extensive clinical and pre-clinical and manufacturing information necessary to continue development of MST-188. SynthRx developed new intellectual property and conducted additional analyses of the existing data. However, they were unable to raise capital to fund development of MST-188 during the “great recession.”

Mast Therapeutics

In 2010, Mast Therapeutics met with Dr. Hunter and his colleagues to negotiate the acquisition of SynthRx and continue the development of MST-188. The merger was finalized in April 2011.

Since April 2011, Mast Therapeutics has re-established the unique manufacturing process through a partnership with Pierre Fabre (FRA) and met with the FDA multiple times to discuss a pivotal study protocol for MST-188 in sickle cell disease. In 2013, Mast initiated the EPIC study, a 388-patient pivotal Phase 3 trial of MST-188 in sickle cell disease, and, in 2014, Mast initiated its second MST-188 clinical program with a Phase 2, proof-of-concept study of MST-188 in combination with rt-PA in patients with acute limb ischemia. In addition, based on recent nonclinical study data showing improvements in cardiac ejection fraction and key biomarkers and prior studies showing MST-188 improved cardiac function without increasing cardiac energy requirements, Mast has announced its intent to pursue clinical development of MST-188 in heart failure.

Glad you enjoyed the read. Not covered in the article is my opinion that significant institutional $ will begin to move into stock post EU orphan status opinion next week. With only 17% institutional ownership, there is a long runway of growth in that department. That expected wave of buying will be what really pushes the stock much higher in Q4. http://bit.ly/1qVCxd4